Australian economy dodges recession
Surprise growth in GDP but government warns economy “not out of the woods yet”.
“The Australian economy has outperformed every other advanced economy in the March quarter, recording positive growth in the face of a savage global recession,” he said after the GDP report was released.
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“We’ve dodged the recession bullet for the time being” Michael Blythe, Commonwealth Bank chief economist Advertisement
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But Swan also warned of tough times ahead.
“The Australian economy is not out of the woods yet, and the full impacts of this global recession still have some way to run,” he added.
Most analysts had expected Australia to slide into its first recession since the early 1990s.
But export data released a day earlier showed stronger-than-expected figures which helped boost the GDP figure for the March quarter.
Any growth at all is a rare performance among the world’s richest countries – the US economy contracted by around 1.6 per cent in the first quarter, Canada by 1.4 per cent, Germany 3.8 per cent and Japan 4.0 per cent.
“We’ve dodged the recession bullet for the time being,” Michael Blythe, chief economist at Commonwealth Bank, said, commenting on the latest data.
Stimulus spending
The government has pumped in about $41bn into the Australian economy since late 2008 in a bid to stave off recession, while the central bank aggressively slashed interest rates to a record low of 3.0 per cent to spur demand.
At its June policy meeting on Tuesday the Reserve Bank of Australia avoided a further rate cut, pointing to stabilisation in the global economy and pockets of improvement at home.
However economists were quick to add caveats to the latest GDP figures, noting that Australia escaped recession only because imports had been slashed as firms cut back on investment.
The drop in imports added 1.6 percentage points to GDP in the quarter, but actually reflected weaker demand.
“We’d still characterise the economy as being in recession given the rise in unemployment and weakness in demand,” Scott Haslem, chief economist at UBS, said.
“But it’s a good outcome compared with most other economies and recent housing and retail data support our case for a return to economy-wide growth in the second half of 2009.”